Leighton Reports 17% Increase in Operating Profit and Record $4.77bn Workload

Issue Date:  13 August 1998
Issued By:  Leighton Holdings Limited

The Directors of Leighton Holdings Limited today announced a 17% increase in Group operating profit after tax and before abnormals of $100.6 million ($86 million last year) from a pre tax profit of $164 million.

The interaction of a series of abnormal items produced an abnormal profit of $2.2 million bringing the total profit after tax and abnormals to $102.8 million. In 1996/97 a significant abnormal profit after tax of $46 million from the sale of Welded Mesh boosted total profit to $132 million.

A fully franked final dividend of 15 cents, recommended by the Directors, will bring the full year ordinary dividend to a total of 26 cents (22 cents last year).

Chief Executive, Mr Wal King, said that both the Australian and Asian operations improved profitability from operating revenue of $2.9 billion.

Principal revenue sources were civil engineering $857 million, contract mining $823 million, and building $659 million. Other major sources were telecommunications $267 million, process engineering $149 million and environmental services $116 million.

"Work in hand has risen to a record level of $4.77 billion," said Mr King. "Long term mining contracts and over $3.3 billion of new contracts and contract variations, primarily in Australia, boosted our forward order book. This should result in increased revenue next year.

"Activity in Australia stayed at a high level with operations contributing $109 million profit before tax from revenue of $2.2 billion.

"Despite challenging circumstances, operations in Asia had another outstanding year producing $54 million profit before tax from revenue of $664 million. Our businesses remain firmly focused on non-speculative developments such as essential infrastructure and resource projects.

"The impact of the economic climate in Asia has been limited due to the Group's selective business strategy and the offset of write-downs by gains from profits in US and HK dollars.

"Australia will drive growth in the year ahead," said Mr King. "With work in hand of nearly $4 billion, the Australia operations should improve their returns and compensate for any modest drop in profits from Asia.

"Accordingly, we believe Group operating profit will again improve in 1998/99.

"Going forward, the challenge for the Group will be to sustain growth using our strong balance sheet and liquidity," said Mr King.

"Our long term growth strategy involves extending existing businesses, pursuing strategic investments and selective geographic expansion.

"Although the non-residential construction market in Australia is likely to downturn early next decade, we are pursuing some major prospects and see opportunities to increase market penetration in certain sectors.

"Also, construction is only one of the Group's main markets accounting for around 50% of revenue last year. We have a major position in the mining industry and see further potential in this market with increasing pressures on costs and productivity.

"New growth markets such as telecommunications and environmental services follow different trends to construction and are now significant sources of revenue.

"The longer term outlook for Asia varies from country to country. Massive government infrastructure projects in Hong Kong should underpin our workload over the next five years. Resource prospects in Indonesia remains positive and the Philippines offer the best opportunities elsewhere in the region.

"A number of strategic investments, which should further lift the current momentum of the Group, are being progressed. Also, resources prospects in South America are cautiously being reviewed in response to the global focus of international mining companies," said Mr King.

The Directors see the overall outlook for the longer term as very positive.

ENDS

Issued by:
Leighton Holdings Limited
ACN 004 482 982

For further information:
Mr Wal King
Chief Executive Officer
Ph: (02) 9925 6912

Mr Dieter Adamsas
Director Finance and Administration
Ph: (02) 9925 6923